1. Field of the Invention
This invention relates generally to financial services and more particularly to a system and method for private equity fund formation.
2. Description of the Background Art
The creation of private equity funds is time consuming and complex. The disbursement of documents in a timely manner to individuals participating in the private equity fund raising process presents challenges. Difficulties are presented because there is no centralized authority that knows all of the participants in the process who need access to the documents, and no ability to deliver such documents in a timely manner.
Current practices involve attorneys preparing the documents and then delivering them on paper or via email to general partners. The general partners, in turn, deliver the documents in paper form or by email to investors. The investors then forward the documents to their representatives, including but not limited to investment advisors, accountants, and attorneys. The documents are then routed to individuals within the investor's representatives' organizations who are responsible for the actual completion of the task on behalf of the investor. Distribution of relevant documents is a complex, multi-step chain of relationships that requires documents to travel many routes.
Current securities laws are complex and to comply with them, private equity general partners need a substantial amount of information from each investor. Private equity general partners usually receive certain detailed information relating to investors via a subscription agreement, which contain complex questionnaires. Such a questionnaire typically includes numerous questions many of which may not be applicable to a particular investor, increasing the possibility of errors. Each investor completes and signs a subscription agreement, then forwards it to the general partners' attorneys. The information in the subscription agreement is summarized in a spreadsheet by the attorneys, and then made available to the general partners. For institutional investors, a more junior individual completes the questionnaire for the subscription agreement, which is then reviewed by a more senior individual with signatory authority. The typical subscription agreement process may take a week or more to complete. There is a need to an improved system and method for private equity fund formation.